NEW DELHI :
The government on Monday invited preliminary bids to divest its 100% stake in Air India, and the airline's subsidiary Air India Express along with its joint venture Air India SATS Airport Services Private Limited. The last date for submission of bids is 17 March, and qualified bidders will be notified 31 March, according to bid document issued by the Department of Investment and Public Asset Management.
Mint takes a look at the key points of the bid document:
The networth requirement for eligible bidders has been relaxed to Rs3,500 crore from ₹5,000 crore, and the lead member of a consortium can have 26% shareholding. The minimum shareholding in a consortium has also been eased to 10%, potentially enabling more entities to bid as part of a consortium.
The successful bidder of Air India will be required to absorb Rs23,286.5 crore of debt after the government transfers Rs63,113 crore of debt from Air India and Air India Express ahead of the national carrier’s proposed divestment. At ₹63,113 crore, the amount works out to be three-fourth of the accumulated debt of the two entities, bulk of which is with Air India.
The government has sweetened the offer this time around. Last time, in 2018, when the Narendra Modi-led government had invited expressions of interest (EoI) to divest 76% stake in the airline, the acquirer was required to absorb Rs49,000 crore in debt.
Following the divestment, majority ownership and effective control of the national carrier must remain with an Indian entity, in accordance with the country’s rules governing foreign direct investment. Foreign entities including foreign airlines can own only up to 49% stake in domestic airlines.
Post divestment, the confirmed selected bidder and the special purpose vehicle (in case of investment in AI is made through a special purpose vehicle) shall ensure that for a period of 1 year from the date of the closing of the proposed transaction, AI or AIXL, as the case may be, shall not transfer, dispose-off and /or create any encumbrance on, any assets owned by AI and AIXL, as the case may be.
It added that the successful bidder shall ensure that Air India and Air India Express continue their business of providing services for at least 3 years.
The confirmed selected bidder shall ensure that 3% of the equity shares of the company acquired (or the special purpose vehicle in case investment in Air India is made through a special purpose vehicle) are offered to the permanent employees of AI as per terms of an ESOP. The detailed terms and conditions of ESOP would be provided at the RFP stage, the bid document said.
Selected bidder shall ensure that the company continues using the “Air India" brand.